Mexico Pumps $3.5 Billion to Lower Pemex’s Debt
By KELIN DILLON
In an attempt to reduce its foreign debt, Mexico’s state-owned fuel company Petróleos Mexicanos (Pemex) received $3.5 billion in bond buybacks from the Mexican federal government, the country’s Secretariat of Finance (SHCP) reported on Tuesday, Dec. 7.
This financial injection is equivalent to 74 billion pesos, about half the annual budget given to Mexico’s Secretariat of Public Health in 2021 – even amid a health-centric year as the covid-19 pandemic rages on – and is a part of liability management for Pemex’s company anticipated 2024 yield curve. However, as noted by the SHCP, maturities for 2022 and 2023 have not been considered and will subsequently be paid for by government contributions.
With this new help factored in, Pemex has received more than $30 billion in financial assistance over the course of the first three years of President Andrés Manuel López Obrador’s (AMLO) administration, implemented between tax cuts, capitalizations and debt payments.
The SHCP went on to say that in the following half of AMLO’s six-year term, the federal government will continue to intervene in Pemex’s affairs to improve its financial position by reformulating business plans and creating opportunities for public investment in the fuel company and its projects.
“It is unsustainable that the Mexican state continues to make these expenditures to Pemex indefinitely because public finances should not be used to maintain a company that in itself is unable to reform, when those resources could be used for other needs of the country,” Mexican Institute for Competitiveness’ (IMCO) Energy Coordinator Óscar Ocampo told daily newspaper Reforma.
Even with the added government assistance, there is little likelihood that Pemex will ever become solvent.
As of 2021’s third fiscal quarter, Pemex was in debt for $113 billion, making it the world’s most leveraged fuel company, with $20 billion due at the end of this year.